Prediction For Post-Pandemic Merger & Acquisition Boom In Healthcare Consolidation
Palm Beach, FL – December 1, 2020 – In times of turmoil many small companies struggle to survive and this pandemic has launched M&A across many industries… healthcare is one of them. Sometimes small companies initially may try to maintain their independence but, eventually they see that maybe the best thing for their patients is to become part of a larger whole. Providers have been consolidating over the last decade as organizations pursue economies of scale and expand vertically and horizontally. Post–Covid-19, it is expected that larger healthcare groups and investors will accelerate their acquisitions of smaller hospitals, physician practices and alternative sites of care. In fact a recent report by industry insider, Bain & Company, said that strained finances and a sharp drop in procedure volumes have pushed organizations hard hit by the pandemic to entertain acquisition offers. Bain’s survey showed 70% of physicians in independent practices were amenable to acquisition. The findings were consistent across surgical specialties (74%), primary care physicians (69%) and other office-based practices (67%). Both surgeons and office-based physicians were willing to consider an acquisition. Active companies in the markets this week include: Teladoc Health (NYSE: TDOC), Skylight Health Group Inc. (CSE: SHG) (OTCQB: CBIIF), AMN Healthcare (NYSE: AMN), HCA Healthcare, Inc. (NYSE: HCA), CloudMD Software & Services Inc. (OTCQB: DOCRF) (TSX-V: DOC).
Bain & Company’s report said: “In 2019, 30% of physicians who owned practices reported that they would sell their practice in the next two years… Today, physicians favor acquisition by organizations that would provide increased financial stability but still offer physician autonomy, namely by other physician practices. Nearly 30% of respondents were open to acquisition by a health system, and nearly 20% said they would agree to a private equity buyout. Large healthcare organizations, including hospital groups, expect to do more mergers and acquisitions. Fifty percent of hospital administrators said their organizations were highly likely to make one or more acquisitions over the next two years to pursue greater scale. Administrators considering M&A were most interested in alternative care sites, including ambulatory surgery centers, urgent care clinics and pharmacy in-store clinics. The next most popular target was independent physician practices, followed by standalone hospitals. Home health businesses that provide care services in the home have continued to gain market share over the last few years, fueled by lower costs and patient convenience, and investors have taken advantage of this trend.”
Skylight Health Group Inc. (CSE:SHG) (OTCQB: CBIIF) BREAKING NEWS: Skylight Health Reports Q3 Results Achieving Consecutive Quarter and YTD Positive Adjusted EBITDA – Skylight Health Group Inc. (formerly CB2 Insights) (“Skylight Health” or the “Company”), one of the largest multi-specialty healthcare systems in the United States, today reported its earnings for fiscal Q3 2020 for the period ended September 30, 2020. Additional information regarding the Company, including its interim financial statements and Management’s Discussion and Analysis (“MD&A”), can be found at www.sedar.com and on the Company’s website (www.skylighthealthgroup.com). All amounts are expressed in Canadian dollars unless otherwise noted.
Following an industry-wide initial reduction of visits in March 2020 due to the COVID-19 pandemic, Skylight Health has continued to see growth in patient visits and registrations, while ongoing improvements to its business model and operating structure have led to reduced costs for delivery of services. The implementation of a telemedicine offering has created opportunities to further reduce the cost of healthcare delivery with lower overheads, higher margins, and improved availability for patients.
The Company expects that virtual care including telemedicine will remain a key delivery model within its growth plan. The Company continues its expansion through the US both organically and by way of acquisition with two new states added in October and November 2020 and a third acquisition announced to close in early 2021. Collectively, the 3 acquisitions are expected to contribute $5 million in annualized revenue and $1 million in annualized EBITDA to the current run rate. As of November 27th, 2020, the Company has CA$10 million in cash on its balance sheet and is focused on its 3-pronged growth strategy including the expansion of insurable services to its current patient roster, subscription for the un/underinsured and accretive acquisitions.
Prad Sekar, Chief Executive Officer of Skylight Health Group stated “We are excited to see the continued efforts of our team and commitment to patient care result in a second consecutive Adjusted EBITDA positive quarter and, for the first time in our company’s history, a full nine months of positive Adjusted EBITDA. We have continued to execute against our business plan, strengthen our management team and create programs that will ultimately delight our patients and optimize their health outcomes. Further we are beyond thrilled to be operating under our name Skylight Health Group and the opportunities it represents for us and our stakeholders in the years to come.”
Mr. Sekar continued, “During our last earnings call in August 2020 we stated that it was time for us to go on the offensive. I am proud to say that we are doing just that. We look forward to executing against our business plan and bringing real value to all our stakeholders.” Read the full Financial Report Release for Skylight Health Group at: https://skylighthealthgroup.com/press-releases/
Other recent developments in the healthcare industry include:
Teladoc Health (NYSE: TDOC), the global leader in whole person virtual care, recently announced that it has completed its merger with Livongo. The milestone marks completion of the most significant blending of capabilities and talent in the history of digital health. By joining the market leaders in virtual care and applied health signals, the combined company becomes the only consumer and healthcare provider partner to span a person’s entire health journey.
“Both Teladoc Health and Livongo were founded with the same mission: to create a new kind of healthcare experience, one that empowers people everywhere to live their healthiest life. Today’s news dramatically accelerates our ability to make this a reality for the tens of millions of consumers and healthcare professionals we serve around the world,” said Jason Gorevic, chief executive officer of Teladoc Health. “Together, our team will achieve the full promise of whole-person virtual care, leveraging our combined applied analytics, expert guidance and connected technology to deliver, enable and empower better health outcomes.”
HCA Healthcare, Inc. (NYSE: HCA) recently announced its completed financial and operating results for the third quarter ended September 30, 2020. The key third quarter metrics (all percentage changes compare 3Q 2020 to 3Q 2019 unless otherwise noted) were; Revenues totaled $13.311 billion; Net income attributable to HCA Healthcare, Inc. totaled $668 million, or $1.95 per diluted share; Adjusted EBITDA totaled $2.053 billion; Results include reversal of $822 million, or $1.72 per diluted share, in government stimulus income from CARES Act funds; Cash flows from operating activities totaled $2.717 billion; and Same facility admissions and same facility equivalent admissions declined 3.8 percent and 9.0 percent, respectively
Consistent with the Company’s preview of third quarter 2020 results, revenues in the third quarter of 2020 increased to $13.311 billion, compared to $12.694 billion in the third quarter of 2019. Net income attributable to HCA Healthcare, Inc. totaled $668 million, or $1.95 per diluted share, compared to $612 million, or $1.76 per diluted share, in the third quarter of 2019. Results for the third quarter of 2020 include a reversal of $822 million, or $1.72 per diluted share, in government stimulus income recorded in the second quarter of 2020 related to general distribution funds received from the Provider Relief Fund established by the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act and $14 million, or $0.03 per diluted share, of gains on sales of facilities. Third quarter of 2019 results included losses on retirement of debt of $211 million, or $0.47 per diluted share.
AMN Healthcare (NYSE: AMN) has again recently been named as the largest healthcare staffing company in the country, marking 14 years at the top of the industry rankings by Staffing Industry Analysts (SIA). AMN Healthcare retained its top ranking among healthcare staffing companies with a 12% overall market share, according to SIA estimates of 2019 annual revenue. AMN Healthcare is the largest travel nursing company, with a 17% market share, and largest in allied healthcare staffing, with a 12% market share. AMN is third largest in locum tenens. AMN has been ranked as the largest healthcare staffing company by SIA every year since 2005, first topping the list in 2001.
“Our company’s success in serving clients and healthcare professionals and their patients is a direct result of the vision, innovation, and incredible hard work of the entire AMN team,” said Susan Salka, President and CEO of AMN Healthcare. “We are extremely grateful for the ability to collaborate with many high-quality partners within and outside our industry to continue elevating our collective purpose and value to the healthcare community. AMN’s impact extends to social issues through our relentless commitment to diversity, equity, inclusion, and fighting social injustice.”
CloudMD Software & Services Inc. (OTCQB: DOCRF) (TSXV: DOC), a telehealth company revolutionizing the delivery of healthcare to patients, recently announced its financial results for the third quarter ending September 30, 2020. All financial information is presented in Canadian dollars unless otherwise indicated.
Dr. Essam Hamza, CEO of CloudMD commented, “I am very pleased with our third quarter results, which have provided us a strong foundation for continued aggressive growth. We are well-funded after raising almost $60 million over the last few months, which will allow us to deploy capital on a robust pipeline of acquisition targets. Based on our Q3 results, combined with recently completed and announced acquisitions, we currently have a solid annualized revenue run rate of $35 million; through planned accretive acquisitions and organic growth, we are confident that this run rate will continue to grow in 2021. We recently closed a number of key acquisitions in Q4 including Snapclarity, iMD, Benchmark and Re:Function which will provide meaningful revenue and are fundamental to our new Enterprise Health Solutions Division. These acquisitions were transformational for us as we are now one of the only healthcare technology companies to provide comprehensive primary and specialist care, mental health support, and educational resources on our proprietary platforms to healthcare practitioners, patients and enterprise clients. We are extremely proud that CloudMD has positioned itself as a leader in thisspace. Our focus on engaging patients and empowering practitioners has created a transformational shift on how healthcare is delivered and proven to have better outcomes for all members involved. We’d like to thank our loyal shareholders and look forward to the next phase of this exciting journey.”
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